Encryption

Encryption is an advanced technology that effectively changes and scrambles information to prevent it from being changed, copied or stolen.

Encryption became critically important in World War II with the advent of more sophisticated forms of communication. As generals and commanders took advantage of mobile phones, radio transmitters and other communications devices, opposing armies set to the task of “hacking” into those communications to steal information. To foil those attempts, the warring parties began encrypting their messages, scrambling them while they were being transmitted, and then un-scrambling them upon receipt.

Today, encryption devices can be installed easily at any point of transmission and/or receipt of information. “Safe phones,” over which high-level and high-security conversations are conducted, operate like this: The encryption devices (hardware or software) are installed only at point A and point B, so that the information being sent – audio, video, text or some combination – can be easily exchanged and clearly understood, while anyone attempting to intercept that information will see and hear only noise.

In the global economy, where literally billions of financial transactions are conducted daily, encryption serves to protect that vast amount of information from being copied or stolen by criminals. The financial services industry itself requires protection of this information, as well as fast and efficient completion of all transactions. Encryption accomplishes this.

With so many transactions involving credit cards taking place over the Internet, information theft has become an industry in itself. Computer hackers look for ways to invade banks, financial institutions and even supermarket computer networks to gain access to the financial information being stored and transmitted daily. Collections of passwords – along with PIN numbers, BIN numbers, credit limits and account numbers – are very valuable items in today’s e-commerce world.

The process of sending encrypted information has not changed since World War II, but the means and the devices certainly have. Today everything is done instantly as credit cards are scanned by electronic data capture devices, or their numbers keyed into a “shopping cart” page on the Internet. All of the sending, receiving and processing is protected by encryption devices that need special “keys” to unlock and descramble the encrypted information.

All of your personal financial information is a series of numbers and letters. Once scanned or entered into any machine, those numbers and letters are then changed, by a particular formula, before they are transmitted. A number “4” could become a letter or a word, a symbol written forwards or backwards or even upside down. Once received by the intended recipient, the key enables them to descramble the coded symbol back into a “4.”

As criminals become more technology savvy, encryption devices have become more complex. Larger transactions are sent through encryption devices that are changed and updated daily. State-of-the-art devices exist to facilitate transactions among the Federal Reserve System and large financial institutions, with access and control strictly limited.

Keys and methods of encryption can be altered on a minute by minute basis so that anyone attempting to crack a code will find that the code is obsolete.

The field of encryption is changing so quickly and becoming so complex that only the most up-to-date computer scientists can keep pace with the changes. What is most important for consumers and merchants to understand is that encryption measures are being researched and developed by the companies that have the most to lose – acquiring banks, credit card issuing banks and the firms that control the electronic pathways among them. This is one area where consumers and merchants can relax and let the bigger companies with the deeper pockets take control.